Internet provider Informatics A company–eg, AOL, Earthlink, that provides a gateway to the Internet and the Web, via an electronic connection–either directly or through a modem, as well as software and services, for which the user pays a monthly fee
In equilibrium, the content and access providers expect each other to behave in this fashion and the prices are determined by their joint actions to maximize their profits.
Here, we examine the impact of increasing the number of access providers as they expand their geographic scope and compete more vigorously in local markets.
As additional access providers join a given terri- some customers will switch from their current access providers to new ones that are closer to their location.
As the number of access providers increases, consumers see two benefits: reductions in their telecommunication charges because they find closer POPs, and reductions in the fees charged by access providers.
If the government, or any other agency, wants to provide free access, it will have to pay for the local communication costs and the fees charged by the various access providers.
The access providers, on the other hand, must provide a physical point of presence, which reduces their mobility and makes them an easy target for various tax proposals.